Management of the Holyrood building project (PDF ... - Audit Scotland

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52 Exhibit 28 Initial and current estimated costs for 55 Holyrood construction contracts Estimated contract cost (£ milllion) Estimated contract cost (£ milllion) 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 40 35 30 25 20 15 10 5 0 Note different scale Note: Values for the three smallest contracts have been excluded from the upper chart Source: Audit Scotland 26 contracts each costing less than £2 million 29 contracts each costing more than £2 million Current estimate of final cost (excluding risk) Initial contract value
4.10 Exhibit 29 (overleaf) presents some illustrations of extra costs arising from slippage and disruption on the Holyrood project. 4.11 Exhibit 30 (overleaf) charts the growth in estimated costs for the whole project from 2000 to 2004. It shows that most of the increase in construction costs became apparent later in the project, from late 2001 onwards when most of the main construction contracts had been committed 25 . In October 2001 a risk workshop identified for the first time a significant cost associated with the time related risks and this was the largest single ingredient of additional cost in subsequent risk workshops. Also from October 2001 the cost consultant’s fortnightly cost reports started to show a steady increase in the base construction costs compared to the cost plan. Some of the increased costs are due to a very high level of design development 4.12 Design development is the normal process when the design of a building evolves in parallel with the tendering and appointment of contractors and subsequent building work on site: • Once the detail design proposals (Stage D) are confirmed, the design team must develop final proposals (Stage E) to allow all components and elements of the work to be coordinated. • The design team must also provide production information (Stage F) with sufficient further detail to allow tenders to be obtained. Production information at tender stage should be sufficient to allow tenderers to price the work accurately. • Once a contractor is appointed it may require more information Part 4. The reasons for increased costs 53 from the design team. The additional information reflects the difference between what is needed to price a job and to physically deliver the building. 4.13 Design development may cover a range of the aesthetic, technical, performance and functional aspects of a design. In the Holyrood project it involved architectural, structural and building service issues. Specialists and trade package contractors provided some of the design input and there was a need for coordination of the whole. Under the construction management approach for the Holyrood project the process was complicated because more design development happened at the same time as (rather than in advance of) construction. Design development included obtaining third party approvals for the design as it developed, for example from the planning authority, Historic Scotland, and the Fire Officer. An important feature for the Holyrood project was the need to develop the design to satisfy security and blast considerations. 4.14 Design development carries a risk of cost increases. But in any project there should be adequate allowance made for this aspect in the Stage D budget or cost plan, the risks should be managed and there should be a change control process to authorise necessary change. 4.15 For the Holyrood project the system for authorising changes was reasonable but it provided a system primarily for monitoring not actively managing and restraining costs. Before project management approved any change to a trade contract the construction manager was required to report on any programme impact and the cost consultant was required to report any cost impact. But the reporting of cost and programme implications of changes that were imminent or inevitable did not offer choice. 4.16 In general terms, for effective control and management a cost manager/cost controller must anticipate and ‘flag up’ potential change at the earliest opportunity and the design team or the contractor must provide alternative solutions to give the client a real choice. In the Holyrood project, however, increased costs have been incurred partly because design development has driven the project. It seems that, for this project, design development became a process of costing a developing design rather than developing the design within a cost. 4.17 The different components of the Holyrood building feature many novel and complex features. For many packages realising the design meant that the cost of the works increased significantly compared to the Stage D design and the November 2000 cost plan. It seems that there was not a full appreciation of the complexity of the design early enough in the project. Only as the design evolved did it become possible to estimate accurately the cost of realising it. The time pressure was such that once aspects of the design were realised and the costs understood often there was no alternative but to proceed because the potential savings from pausing and seeking a more economic design were judged to be outweighed by the potential costs of delay and disruption from not proceeding. 4.18 In some cases complex architectural requirements involved previously untested building solutions. In these cases the difficulties were made worse by tight tolerances and multiple complex interfaces between packages. It was time consuming and expensive to develop solutions. 4.19 A striking example of the impact of this is the foyer roof and glazing contract (Exhibit 31 overleaf). 25 As shown in Part 2 (Exhibit 14) 15 of the 20 largest contract tenders had been authorised by December 2001, and by this time 78% by estimated value of all work had been awarded.
Page 1 and 2:
Management of the Holyrood building
Page 3 and 4: Contents Key findings Page 4 Part 1
Page 5 and 6: List of exhibits Exhibit 1: The Aud
Page 7 and 8: 1. The subject of my report is the
Page 9 and 10: detailed design at the tender stage
Page 11 and 12: 30. In all projects, care should be
Page 13 and 14: 1.1 This report concerns the manage
Page 15 and 16: Exhibit 2 Changes in the forecast c
Page 17 and 18: Exhibit 3 The new Parliament buildi
Page 19 and 20: Exhibit 4 Key features of construct
Page 21 and 22: Exhibit 7 Holyrood - main programme
Page 23 and 24: 2.24 Discussion of the necessary co
Page 25 and 26: was linked to varying degrees to a
Page 27 and 28: Exhibit 11 The Parliament’s Holyr
Page 29 and 30: Exhibit 13 Audit findings on the Fl
Page 31 and 32: Exhibit 14 Tender approval for 20 m
Page 33 and 34: Exhibit 15 Slippage in programme 6
Page 35 and 36: Exhibit 16 Slippage in programme 7
Page 37 and 38: • additional work to roof lights
Page 39 and 40: Part 3. The reasons for later deliv
Page 41 and 42: Exhibit 19 Key features of traditio
Page 43 and 44: Exhibit 20 Post tender changes in c
Page 45 and 46: Exhibit 22 Problems of interdepende
Page 47 and 48: January 2003 Source: Audit Scotland
Page 49 and 50: Exhibit 24 Initial contract delays
Page 51 and 52: were responsible for some elements
Page 53: Exhibit 27 Increase in the forecast
Page 57 and 58: Exhibit 30 Holyrood - estimated con
Page 59 and 60: Exhibit 32 Main reasons for constru
Page 61 and 62: 4.27 The architects had accepted re
Page 63 and 64: 4.36 After construction started the
Page 65 and 66: Exhibit 37 AGS recommendations on p
Page 67 and 68: Exhibit 39 Achievement of prioritie
Page 69 and 70: Exhibit 41 Holyrood project organis
Page 71 and 72: Exhibit 43 Design team management P
Page 73 and 74: Exhibit 46 Comparative unit constru
Page 75 and 76: Exhibit 47 Estimated construction c
Page 77 and 78: that the original procurement strat
Page 79 and 80: Exhibit 48 Special features of work
Page 81 and 82: Appendix 1. Trade Contract case stu
Page 83 and 84: 9. In July 2001 the construction ma
Page 85 and 86: 7. The blast doors are critical to
Page 87 and 88: performance of glazing in the debat
Page 89 and 90: Cost issues 7. Due to the limited l
Page 91 and 92: work continued on site and by mid J
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